What You Need to Know About Virtual Terminal Credit Card Processing

What You Need to Know About Virtual Terminal Credit Card Processing

Whether you run an e-commerce store or restaurant, your customers want to pay with a credit card. That’s why it makes sense to offer virtual terminal credit card processing.

You may have already done this. You may even accept payments online, over the phone, and via snail mail.

With everything in place, you no longer have to worry about issues with accepting payment. You’re good to go, right? Not so fast…

You forgot one rule as a business owner: Don’t let profits slip away for no good reason!

Because you probably are paying too much in virtual terminal credit card processing fees. Get rid of those fees, and you could boost profits by double digits (really!).

Here’s what you need to know about implementing the best virtual terminal credit processing system.

How virtual terminal credit card processing works?

Virtual terminal credit card processing is a web application that gives you the ability to process payments without a card reader (aka a card-not-present transaction). The customer simply types in the card information, and payment is processed.

A variety of businesses can benefit from virtual terminal credit card processing, especially those that do business over the phone and internet. Industries where virtual terminal credit card processing is most used include:

restaurants

e-commerce

delivery services (food, groceries, etc)

professional agencies, such as marketing and graphic design companies

Businesses that do high-value transactions also tend to use virtual terminal credit card processing. Paying and caring for point-of-sale (POS) hardware doesn’t make sense if you’re not doing a lot of transactions.

Although virtual terminal credit card processing may not cost you much upfront (if anything), you’ll pay fees per transaction. Similar to POS credit card processing fees, your total fee (or effective rate) comes from the following fees:

The fees for virtual terminal credit card processing may not even end there. As noted before, you may pay a monthly fee. Many MSPs have complex multi-tiered plans, so you may also have to pay surcharges.

On top of all that, you may have to pay fees even if the sale is voided or refunded. Ask your MSP to waive voided transaction fees and at least part of the fees for refunded transactions. Because you don’t want to pay fees without getting any revenue!

Now, you may be asking yourself: Why do MSPs charge so much for virtual terminal credit card processing?

Well, they know business owners have busy schedules. They don’t have a lot of time to analyze fee structures and shop for better options, especially when they want to ensure payment conveniences for customers.

If you knew how much you could benefit from eliminating virtual terminal credit card processing fees, you’d probably take action. Because there’s actually a lot of money on the line…

Let’s put this in numbers. It will give you a clear picture of what you stand to gain.

First, as a TSYS US Consumer Payment Study found, credit cards are the most popular form of payment at businesses that typically use virtual terminal credit card processing, like e-commerce stores and travel sites:

If you run an online clothing store or a boutique hotel, you could use virtual terminal credit card processing for nearly half of your transactions. And probably well more than have of your revenue comes from credit card transactions.

As data from the US Federal Reserve shows, non-cash transactions have a value of $112 per transaction, versus just $22 for cash transactions.

Given the numbers, it’s possible 60-70% of your revenue could come from virtual terminal credit card processing, especially if you don’t do many in-person transactions.

Now, let’s figure out how much you could be paying in fees. As an example, let’s say you run a small motel and your revenue is $2 million per year, among which: